Friday, 22 July 2011

Greece Pledges Debt Eradication After Second Financial Package

Greece is expressing relief after securing a second European-backed emergency financial package aimed at preventing Athens from defaulting on its huge public debt and stabilizing the common European currency.

The European Union and the International Monetary Fund reached agreement Thursday in Brussels to give Greece another bailout worth about $155 billion. Greece will also get voluntary loans from the private sector to help cover the financial gap.

EU President Herman van Rompuy and European Commission President Jose Manuel Barroso said participants unanimously supported the package they described as a Marshall Plan for Greece to ensure the sustainability of its debt and prevent the crisis from spreading.

Greek Finance Minister Evangelos Venizelos says the bailout package is "a great relief" for the Greek economy, which will be gradually passed on to the "real economy." But Venizelos added that Athens will not relax its efforts to eradicate its debt.

Greece has imposed a set of austerity measures - including tax hikes and budgetary cuts - that have sparked violent protests.

In the past year, Greece - and later, Ireland and Portugal - were forced to secure international financial assistance from their European neighbors and the International Monetary Fund.

Leaders of the European countries using the euro said they have agreed on measures to prevent future crisis from occurring instead of acting after it happens.

They said Greece is expected to receive an estimated $53 billion credit from the private sector, to ensure that Greek banks can operate within the euro system. But those contributions will be voluntary.

Eurozone leaders also pledged to provide adequate resources to re-capitalize Greek banks if needed, but stressed the private sector will not be involved in financial bailouts for other eurozone countries. Barroso said Greece is an exceptional case that requires a unique solution.

In a statement, the leaders of 17 euro countries and their financial institutions said they are determined to continue to provide support to countries under EU financial aid programs, provided they commit to implement the necessary reforms. They welcomed Ireland's and Portugal's resolve to implement their austerity programs